{"id":10746,"date":"2025-02-18T05:12:27","date_gmt":"2025-02-18T05:12:27","guid":{"rendered":"https:\/\/websitedevelopmentcompanyjaipur.com\/sparrowaccountingsolutions\/?p=10746"},"modified":"2025-06-27T03:32:17","modified_gmt":"2025-06-27T03:32:17","slug":"what-accounting-services-should-you-really-outsource-for-your-ecommerce-business","status":"publish","type":"post","link":"https:\/\/websitedevelopmentcompanyjaipur.com\/sparrowaccountingsolutions\/what-accounting-services-should-you-really-outsource-for-your-ecommerce-business\/","title":{"rendered":"What Accounting Services Should You Really Outsource for Your Ecommerce Business?"},"content":{"rendered":"

Accounting for eCommerce might seem straightforward at first: sell products, deliver orders, restock inventory, and repeat.<\/p>

But there’s more to it.<\/p>

At first glance, eCommerce accounting may appear similar to traditional business accounting. However, online retail involves additional complexities like returns (RTOs), refunds, shipping, inventory management, fulfillment, and various other costs\u2014all with their own unique financial considerations.<\/p>

As an eCommerce business owner, it\u2019s crucial to understand the intricate details of eCommerce accounting and set a solid foundation for financial clarity and better decision-making.<\/p>

Since some accounting tasks require more time and attention to detail than others, there will come a point when outsourcing your eCommerce accounting<\/a> becomes essential.<\/p>

By outsourcing, you can focus on business strategy rather than day-to-day bookkeeping, improving efficiency and promoting growth.<\/p>

Now, let\u2019s dive into which eCommerce accounting tasks you should consider outsourcing.<\/p>

Accounting For Ecommerce vs Traditional Accounting<\/h2>

Most businesses don\u2019t understand that\u00a0accounting for ecommerce<\/a>\u00a0is unlike traditional accounting \u2013 it\u2019s much more complex, requiring expertise only a seasoned accountant can handle.\u00a0<\/p>

This confusion shows in their numbers, leading to poor financial data and decision-making.<\/p>

Let\u2019s delve into the four core differences.<\/p>

1. Where You Find Your Financial Data<\/h3>

In traditional accounting, most financial transactions are available in your bank account.<\/p>

But that\u2019s not the case with e-commerce accounting. <\/p>

Here, you are dealing with multiple sales channels and a pool of payment processors.<\/p>

Collecting all the data and putting it into one place can be challenging. <\/p>

And let me remind you, making sense of the sales data is a task on its own. You\u2019ve got the delivery cost, gift card credit, FBA fees, platform subscriptions, and other costs to consider.\u00a0<\/p>

Now most people misquote their revenue. <\/p>

For example, they could have made $120K from their sales, and yet, state $65K as their revenue. <\/p>

What happens is they overlook other deductions, so when they see $65K in their bank account, they mistakenly treat it as their revenue, ignoring platform fees, shipping costs, and other expenses.<\/p>

It may not seem like a problem at first but misquoting revenue can lead to an inaccurate interpretation of your gross profit margin, resulting in poor decision making. <\/p>

Now, when you have other business operations on your to-do list, outsourcing your accounting will be ideal for you. <\/p>

I recommend outsourcing this responsibility to a reliable resource that has access to top\u00a0ecommerce accounting software<\/a>\u00a0to handle your bookkeeping and accounting.\u00a0<\/p>

In fact, outsourcing your accounting becomes a cerebral choice considering the boom in e-commerce sales by\u00a056%<\/a>\u00a0in the next four years.<\/p>

2. How You Handle COGs and Inventory Accounting<\/h3>

Now let\u2019s get to the second part of the equation when calculating gross profit margin \u2013 your COGs.<\/p>

COGs are the cost of goods sold. <\/p>

So, how do you accurately calculate this number?<\/p>

The right way is to calculate the cost of each SKU. <\/p>

\"YouTube<\/figure>

Now, it is important to do a monthly calculation of your COGs to have a clear understanding of your gross profit margin. <\/p>

You can do this by simply multiplying the product cost of each SKU with the number of goods you\u2019ve sold in a month. <\/p>

Another thing to consider here is that your monthly estimation of COGs will reflect your inventory value. <\/p>

And if you do it right, your COGs will always be higher than your inventory. <\/p>

3. Understanding Different Sales Tax Compliance<\/h3>

Sales tax compliance is a complicated business. You are dealing with different laws, currencies, and time zones. <\/p>

The more you scale your business, the more challenging it becomes to figure out where you need to be collecting and remitting sales tax. <\/p>

Now throw in federal and state-level laws along with international regulations \u2013 it could be difficult to keep up. <\/p>

What you can do as a small business owner is keep an eye on the laws where your business is located. <\/p>

And if your inventory is located somewhere else, you\u2019ll have to watch out for that as well. <\/p>

Don\u2019t forget that the e-commerce platform might have its own system. <\/p>

For example, if your online store is on Amazon, you have to stay FBA-complaint.<\/p>

The good news is that Amazon mostly takes care of sales tax compliance on its own, but this feature is not available in every state yet. <\/p>

Because tracking the latest sales tax rates and jurisdictions is hard, it\u2019s best to consider\u00a0outsourcing this responsibility\u00a0to someone well-versed in this department.\u00a0<\/p>

Not only will it save you time but it will also ensure cost-saving.\u00a0
<\/p>

4. Dealing with Foreign Transaction Fees<\/h3>

Ecommerce businesses dabble with foreign transaction fees more than other businesses due to the nature of their industry.<\/p>

\"YouTube<\/figure>

Ecommerce Accounting Tasks You Should Outsource<\/h2>

When it comes to ecommerce businesses, the sooner you start outsourcing your accounting, the better. <\/p>

By getting an experienced e-commerce accountant on board, you\u2019re building a strong foundation for your business. <\/p>

Currently,\u00a037% of small businesses\u00a0outsource their accounting and 51% of freelancers currently offer accounting services to e-commerce businesses across the world.\u00a0<\/p>

Below are some of the prominent accounting services that you should outsource:<\/p>

1. Order Processing for Operational Efficiency<\/h3>

Order processing is a process that begins once you receive an order on your website or online store and ends once that product has been delivered. <\/p>

This is an important piece of your e-commerce business as its fulfillment results in high customer satisfaction and smart operations. <\/p>

Here\u2019s how it goes:<\/p>

  1. Inventory is sent to your warehouse<\/li>\n\n
  2. Stock is stored<\/li>\n\n
  3. Each item of an order is picked<\/li>\n\n
  4. Each item of an order is packed<\/li>\n\n
  5. The parcel is dispatched through a delivery service or courier<\/li>\n\n
  6. The parcel is delivered<\/li><\/ol>

    Now, this is a long process that is repeated for each item in your inventory. <\/p>

    The best way to manage it is through automation.  <\/p>

    You can integrate your order processing system with your accounting solution, inventory management, and payment processors to organize and streamline the process. <\/p>

    And with global warehouse automation expected to hike\u00a013.6%\u00a0by 2026, this looks like the best solution.<\/p>

    It reduces the chances of human errors, saving you time, and translating into real-time tracking updates.<\/p>

    By doing the groundwork, you can provide accurate information to your customers and vendors. <\/p>

    For example, if a customer asks for its order status, you can notify them about its whereabouts; If the warehouse is preparing it for dispatch or it’s in the shipment phase.<\/p>

    To ensure timely delivery and customer satisfaction, it\u2019s best to outsource this part of your e-commerce business. <\/p>

    Instead of handling this on your own or hiring new employees, outsourcing this responsibility to someone with the right knowledge and tools can really expedite the process for you, and at a much lower cost.<\/p>

    2. Inventory Management For Increasing Profitability<\/h3>

    To successfully run an e-commerce business, step one is to deliver your products on time.<\/p>

    In this case, inventory management is the key. <\/p>

    Problems with inventory management lead to poor customer satisfaction and reduced performance. <\/p>

    Through proper inventory management, you gain data visibility that can help you make better decisions. <\/p>

    For example, you can plan out dead stock, low stock, and overstocking. <\/p>

    \"YouTube<\/figure>

    While it may not seem necessary in the beginning, the need to automate and outsource this responsibility will become evident once you start scaling your business. <\/p>

    By facing inventory management challenges head-on, you can improve your profit margins through informed decision-making. <\/p>

    3. Financial Reporting For Better Decision-Making<\/h3>

    Financial introspection is necessary for any e-commerce business to grow. <\/p>

    By following the best financial practices you can track your business operations and keep an eye on your company\u2019s financial health. <\/p>

    A part of it means monitoring and tracking your cash flows to generate accurate financial statements on a monthly or quarterly basis. <\/p>

    By\u00a0mastering your financial statements,\u00a0you empower yourself in the accurate decision-making.\u00a0<\/p>

    Analyze cash flow statements for better financial insights.
    Track income and expenses to maintain financial control.
    Forecast budgets and profits for strategic planning.
    Review your balance sheet to assess overall financial health.<\/p>

      <\/ol>
        <\/ol>

        But it requires you to handle your day-to-day bookkeeping which can be time-consuming. <\/p>

        And because there\u2019s absolutely no room for error here, you must decide to take this up yourself or outsource to a professional. <\/p>

        A wise business owner would choose the latter. <\/p>

        4. Tax Planning & Preparation For Compliance<\/h3>

        Imagine working on your e-commerce business throughout the year, and being excited for what\u2019s ahead, only to be hit with money-draining penalties during tax season.\u00a0<\/p>

        Sounds like a nightmare to me. <\/p>

        99% of businesses consider federal income tax as a huge pain point. <\/p>

        And here\u2019s the thing \u2013 tax compliance is a major issue with most businesses. <\/p>

        E-commerce companies are constantly grappling with tax regulations that are different from state to state. <\/p>

        Does that mean you simply put your hands up and accept it as a labyrinth of suffering from which there\u2019s no way out?<\/p>

        Well, no. <\/p>

        This is your signal to consider outsourcing your tax planning and its preparation.<\/p>

        Not only will it save you time and energy, but you will also be directed in the right direction. <\/p>

        And more importantly, an expert can help you leverage significant tax deductions, contributing to the expansion of your profit margin.<\/p>

        Accelerate Growth By Outsourcing E-Commerce Accounting<\/h2>

        Over\u00a0$315 million\u00a0people are expected to shop online by 2028 whereas the e-commerce industry is expected to make over $1 trillion by 2029.\u00a0<\/p>

        If these numbers don\u2019t encourage you to start outsourcing your accounting, I don\u2019t know what would. <\/p>

        Your business can contribute to these numbers by carefully planning and embracing the power of powerful delegation. <\/p>

        Through outsourcing, you get:<\/p>

        1. Financial clarity<\/li>\n\n
        2. Cost saving<\/li>\n\n
        3. Business Insights<\/li>\n\n
        4. High-profile investors<\/li><\/ol>","protected":false},"excerpt":{"rendered":"

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